Bank funds backing for firms.
Although the bank announced a national cap to the additional invoice finance fund, it is understood more money may be made available if demand exists and there are no regional allocation limits with businesses being assessed on a first-come-first-served basis.
Invoice finance - sometimes called cash-flow finance - is a sales-driven facility which enables business to obtain up to 85% of the value of invoices they issue immediately with the remainder payable, minus a fee, when payment is received. It can prove a cost effective way of releasing cash that would otherwise be tied up in unpaid invoices.
According to a recent report by Barclays Local Business small businesses in the North-east are collectively owed more than pounds 1.1bn on any given day due to suppliers or customers failing to pay on time.
Managing partner of Yorkshire Bank's Tees Valley Financial Solutions Centre (FSC) at Stockton, Chris Ibbotson, said: "Tougher economic conditions traditionally lead to pressure on cashflow for small to medium sized businesses, compounded by a tendency among their customer businesses to delay payments, usually because they face similar difficulties.
"Invoice finance helps businesses to run smoothly by releasing a proportion of invoiced values immediately. We are sure that many will want to benefit from the additional funds available and that it will play an important role in helping both our existing and new business customers operate in the current climate."
Firms will not be required to take out credit insurance as a condition of the loan, which has become increasingly hard for small firms to afford, the bank said.
Yorkshire Bank's National Invoice team has 80 staff, based in 77 fin-anciasolutions centres across the UK. A further eight new jobs, including auditors and relationship managers who will work throughout the UK, are being created to help meet the anticipated demand for the cash injection.
News of the new fund follows the release of Yorkshire Bank's interim results in April which showed, in the six months to March 31, it had expanded its customer base by 5% with business lending up by 14%, representing pounds 1.2bn of new money to support local business and deposits increasing by 15%.
HELP FOR BUSINESS: Yorkshire Bank's Chris Ibbotson
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|Publication:||Evening Gazette (Middlesbrough, England)|
|Date:||Jul 3, 2009|
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